Wall St slips from record high after downbeat retail sales data

Disappointing retail sales data weighed on the major indices, although the Nasdaq managed to buck the trend.

US stocks slipped from their record highs as retail sales data disappointed. Picture: Drew Angerer/Getty Images/AFP.

The S&P 500 and Dow Jones Industrial Average fell Friday but ended the week just above where they started.

The declines came after all three major US stock indexes notched records on the same day for the first time since 1999 on Thursday. It was the ninth record for the S&P 500 in 2016 and the eighth for the Dow Jones Industrial Average — a turnaround from the start of the year when global markets tumbled.

Stocks have reached milestones in large part because of continued support from central banks. Investors are sceptical that the Federal Reserve will raise interest rates soon, while central banks in Europe and Japan have loosened monetary policy. This has left stocks from emerging markets to the S&P 500 on an uptrend and global developed-market bond yields plumbing highest lows.

Some traders believe stocks have room to climb further still. US retail sales were flat last month, the Commerce Department said Friday, reinforcing investors’ expectations that the Fed is unlikely to raise rates when it meets next month.

Federal-funds futures, which are used to place bets on central-bank policy, showed Friday that investors and traders see a 6 per cent likelihood of a rate increase at the Fed’s September meeting, according to CME Group, compared with 18 per cent after last week’s strong July jobs report. On Friday, the probability of an increase by December was 43 per cent.

“Traditionally when interest rates are this low and central banks are this accommodative, it’s been a positive for risk assets,” said Thomas Wilson, senior investment manager and managing director of wealth advisory at Brinker Capital.

The Dow Industrials slipped 37.05 points, or 0.2 per cent, to 18576.47, and the S&P 500 fell 1.18 points, or 0.1 per cent, to 2184.05. The Nasdaq Composite rose 4.50 points, or 0.1 per cent, to a record close of 5232.89.

The dollar fell against the Japanese yen and the euro. The yield on the 10-year Treasury note fell to 1.515 per cent from 1.575 per cent Thursday. Yields fall as prices rise.

While Friday’s retail-sales figures were underwhelming, other data including job growth and earnings suggest the outlook for consumers is healthy, said Jeremy Zirin, chief equity strategist for UBS Wealth Management Americas.

Shares of department stores rose again Friday after results surpassed expectations. J.C. Penney narrowed its quarterly loss and reported a sales increase Friday. Shares rose 6.1 per cent.

Shares of Nordstrom rallied 8 per cent after the retailer raised profit projections for the rest of the year and beat expectations late Thursday.

Consumer shares and energy companies have been some of the biggest gainers this week.

US crude oil extended its gains Friday, rising 2.3 per cent to $US44.49 a barrel, one day after Saudi Arabia’s energy minister said the country would work with other oil producers to stabilise prices. While the official’s comment was interpreted by some to mean Saudi Arabia would support a production cap, many traders and analysts remained sceptical the country would limit its output.

Earlier in the week, the Organization of the Petroleum Exporting Countries said its members would hold informal talks next month, raising hopes for a co-ordinated cap, and separately the International Energy Agency said global inventories of crude oil could shrink in the second half of the year.

US crude rose 6.4 per cent for the week, its largest gain since April 8.

Elsewhere, the Stoxx Europe 600 fell 0.2 per cent Friday but notched a weekly gain of 1.4 per cent.

Japan’s Nikkei Stock Average rose 1.1 per cent Friday and 4.1 per cent for the week.

Dow Jones